Secured lending is an important pillar for economic growth and development; it opens up access to credit, especially for large sectors of the population that do not own land to use as collateral and consequently are unable to obtain credit at all or only at very high rates of interest. Modernization of the laws that enable secured financing is therefore essential as has been recognized by the OAS General Assembly (International Law, AG/RES. 2909). In furtherance of the ongoing mandate to the Department of International Law (DIL) to promote the Model Inter-American Law on Secured Transactions, the following recent activities are brought to the attention of those who wish to stay abreast of relevant developments in the field as relevant to the Americas.

The Department was invited to participate in the Third Conference on International Coordination of Secured Transactions Law Reforms: “Advancing Reforms Globally and in Latin America Through Enhanced Coordination” held February 12–13, 2020 in Colombia and in the subsequent Workshop: “Harmonization of Secured Transactions Law and Implementation of Reforms in Latin America” on February 14th. Featured speakers included the Secretary of the United Nations Commission on International Trade Law (UNCITRAL), the Secretary General of the Institute for the Unification of Private Law (UNIDROIT), high-level officials of the World Bank Group, plus numerous government officials, legal practitioners, and academics. The Conference was co-organized by the International Insolvency Institute, Kozolchyk National Law Center, Universidad de los Andes and Universidad Externado de Colombia with sponsorship from the World Bank Group and others. This was the third conference to consider enhanced coordination among entities engaged in secured transactions reforms and was a follow-up to discussions held at the first one in Philadelphia in 2017 and the second in Madrid in 2018. The subsequent Workshop, which was co-hosted by UNCITRAL, UNIDROIT and Confecámaras, featured a keynote address by the Minister of Justice and Law of Colombia. Its focus was on domestic implementation in the region; panelists discussed Colombia’s reforms and statistics that evidence positive impacts on access to credit, and recent reform initiatives by other states, such as Peru,¹ among others².

In November 2019, a new instrument referred to as the “MAC Protocol” was adopted at the UNIDROIT diplomatic conference with the participation of representatives from over 40 States and various international entities. The Protocol (i.e., the Convention on International Interests in Mobile Equipment on Matters specific to Mining, Agricultural and Construction Equipment) will provide businesses in the mining, agriculture, and construction sectors the ability to acquire equipment that they would not have otherwise been able to buy or lease and thereby optimize productivity and profitability. It is expected to be of particular interest to those states with growing commercial activities in these three sectors. The Protocol is an extension of the 2001 “Cape Town Convention” (i.e., Convention on International Interests in Mobile Equipment, with 80 Contracting Parties), which has already been extended to other types of large mobile equipment (Aircraft Objects 2001, Railway Rolling Stock 2007 and Space Assets 2012). A number of OAS Member States are parties to the Convention and the Aircraft Protocol; Paraguay was the first OAS Member State to sign the new MAC Protocol.

In October 2019, the United States of America ratified the United Nations Convention on the Assignment of Receivables in International Trade (New York, 2001). This represents the second ratification, with three additional required for the Convention to enter into force. Although the Receivables Convention predates the Model Laws on Secured Transactions of both UNCITRAL (2016) and the OAS (2002), all of these instruments enable receivables finance and should be considered collectively to facilitate improved access to credit at lower cost. The Convention minimizes legal impediments by validating assignments of future receivables³ and bulk assignments, enhancing certainty in crucial technical matters and clarifying the law applicable to key issues, such as priority. The Convention applies to international assignments and assignments of international receivables complementing the domestic rules.

Over the past several years, DIL has been collaborating with the University of Cadiz in the compilation of a monograph on the Model Inter-American Law on Secured Transactions, which comprises annotated articles and reports on the status of reforms in various states in the region. The monograph is in the final stages of completion and is expected to be published shortly.

What these various activities illustrate is the inter-connectivity among a number of initiatives to improve secured lending and the need for DIL “to continue promoting among member states further dissemination of private international law, in collaboration with organizations engaged in this area” (International Law, AG/RES. 2930).  

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¹ Legislative Decree No. 1400 of September 10th 2018 provides for a new secured transactions regime in Peru while Supreme Decree No. 243-2019/EF of August 3rd 2019 entails the relevant regulations. However, Leg. Dec. No. 1400 will only come into force once the SIGM (Sistema Informativo de Garantías Mobiliarias) (Information System on Secured Transactions) databases have been made functional by SUNARP (Superintendencia Nacional de los Registros Públicos) (National Superintendence of Public Records), which is expected to occur within the year.

² The Dominican Republic is the most recent OAS Member State to have approved legislative reforms on the subject. The Law on Secured Transactions was approved on its second reading in the Senate on February 10, 2020.

³ A “receivable” – i.e., a debt owed by another party to the holder – has value and can therefore serve as an asset to be used as “security” (collateral) in debt financing.